A Challenge to Traditional Theory
A challenge to traditional management theory
Ed Weymes
Introduction
Modern management theories are focussed on how individuals contribute to organisation and corporate performance while the performance of the chief executive is dictated by the organisation’s financial returns and share price. While organisations espouse the principles associated with total quality management, learning organisations, high performance organisations and implement balanced score cards, the chief executive’s primary focus is fixated on retaining control of the organisation to meet shareholder expectations. As we enter the new millennium the corporate world has been rocked by the scandals involving Enron, Worldcom and Adelphia in the USA and in Europe by Parmalat and Mannesmann. These, and a host of other organisations, have been publicly criticised for fraudulent accounting practises or excessive personal gain for the chief executive and senior members of the administration while creating a financial catastrophe for employees and shareholders. The public no longer trusts the corporate world. The World Economic Forum’s (2004) global surveys on trust in 2004 and 2002 indicate that people’s trust levels in global and large domestic companies remain very low with less than 10 per cent of respondents reporting “a lot of trust” in these institutions operating in the best interests of society. (The results for 2004 show some improvement over 2002.) In Europe, the concept of corporate social responsibility (CSR) is the subject of many boardroom discussions and in the USA the Dow Jones publishes a CSR index on the premise that many investors believe firms who practice social responsibility provide better long term financial returns. The intent of CSR is to add value to society, to leave the world in a better position for our grandchildren by building environmental and social responsibilities into the traditional economic equation. Proponents of CSR claim that this approach will restore public
Ed Weymes
Introduction
Modern management theories are focussed on how individuals contribute to organisation and corporate performance while the performance of the chief executive is dictated by the organisation’s financial returns and share price. While organisations espouse the principles associated with total quality management, learning organisations, high performance organisations and implement balanced score cards, the chief executive’s primary focus is fixated on retaining control of the organisation to meet shareholder expectations. As we enter the new millennium the corporate world has been rocked by the scandals involving Enron, Worldcom and Adelphia in the USA and in Europe by Parmalat and Mannesmann. These, and a host of other organisations, have been publicly criticised for fraudulent accounting practises or excessive personal gain for the chief executive and senior members of the administration while creating a financial catastrophe for employees and shareholders. The public no longer trusts the corporate world. The World Economic Forum’s (2004) global surveys on trust in 2004 and 2002 indicate that people’s trust levels in global and large domestic companies remain very low with less than 10 per cent of respondents reporting “a lot of trust” in these institutions operating in the best interests of society. (The results for 2004 show some improvement over 2002.) In Europe, the concept of corporate social responsibility (CSR) is the subject of many boardroom discussions and in the USA the Dow Jones publishes a CSR index on the premise that many investors believe firms who practice social responsibility provide better long term financial returns. The intent of CSR is to add value to society, to leave the world in a better position for our grandchildren by building environmental and social responsibilities into the traditional economic equation. Proponents of CSR claim that this approach will restore public
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